Delhivery Q4 results preview: Will the new age player deliver a surprise in earnings?

New age delivery player Delhivery is set to report its earnings for the period ended on March 31, 2023 on Friday and analysts expect the company to report adjusted positive EBITDA for the first time since its debut at Dalal Street. Delhivery has the potential to be used as a proxy to play e-commerce growth in India. Analysts majorly see the company to report a single digit rejig on either side in revenue on both year-on-year (YoY) and quarter-on-quarter (QoQ) comparison, but its net loss is seen contracting significantly on a yearly basis. With continued interest rate hikes and heightened inflation, discretionary spending remained subdued in 4QFY23, they said. ICICI Securities estimated express parcel shipment volumes to decline 4 per cent YoY and flattish QoQ given a high contribution of Shopee in the base quarter. It believes Delhivery is likely to have gained market share in the 3PL category, with sustained improvement in PTL volumes as Delhivery continues to improve SLAs. Delhivery is among brokerage's key picks from the sector. "However, PTL volumes may still remain 30 per cent below pre-acquisition levels. Overall, we estimate Delhivery’s revenue to grow 5.8 per cent QoQ but drop 6.8 per cent YoY to Rs 1,930.5 crore. We estimate Delhivery to deliver positive adjusted EBITDA in Q4FY23 for the first time since listing with net loss at Rs 124.6 crore. This could be a positive trigger for the stock," it said. "We expect Delhivery’s express parcel business to see a marginal decline sequentially due to the sale season in Q3FY23 with PTL business expected to continue normalising post Spoton integration completion to grow 21 per cent QoQ. On a YoY basis, express parcel business would decline by 3 per cent due to the exit of Shopee in Q4FY22 while PTL business is still 30 per cent lower in comparison to the pro forma numbers in the same quarter last year," said JM Financial. With cost optimisation measures seen in Q3FY23, JM expects Delhivery to deliver high incremental gross margins and hence improve adjusted EBITDA margin by 219 bps sequentially to reach -1.5 per cent. It sees total revenue at Rs 2,071.8 crore, up 3.6 per cent QoQ but down 8.8 per cent YoY. Losses are seen at Rs 119.1 crore, contracting 52.3 per cent YoY with a EBITDA margin of 3.9 per cent. ICICI Securities had a 'buy' rating on Delhivery with a target price of Rs 425 on the stock in its preview report, while JM Financial pegs Delhivery at Rs 350 with a hold rating.

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